Fraudulent lawyers tie up payment of BP oil spill claims

The $20 billion BP oil spill fund, bogged down by questionable claims and unscrupulous lawyers, has paid out a fraction of the money. Image: Flickr/ZeNahla CC-BY-SA

The U.S. government ordered BP to set aside a $20 billion oil spill fund in the wake of the Deepwater Horizon disaster. A year later, the Gulf Coast Claims Facility, intended for nursing businesses and individuals affected by Gulf oil spill back to economic health, has paid out only a fraction of the money. Claimants waiting for payment describe a time consuming, convoluted process that has been made more complicated by a horde of lawyers seeking to profit from the BP oil spill fund.

BP oil spill claims process

A year after the 2010 oil spill in the Gulf of Mexico, the Gulf Coast Claims Facility has paid $3.8 billion in BP oil spill claims — just 19 percent of the $20 billion in seed money set aside by the oil company. The latest report from Kenneth Feinberg, who was appointed by the Obama administration to disburse the BP oil spill fund, said that 201,261 claims have been paid. More than 857,000 claims have been made. The Gulf Coast Claims Facility, which has 35 offices in five states with 3,200 employees, will continue to pay BP oil spill claims until August 2013. Feinberg has been criticized by Gulf residents and local government officials for a claims process that has been called confusing, unfair and slow.

Proving BP oil spill damages

In a statement issued Tuesday defending his administration of the BP oil spill fund, Feinberg said “Amounts requested by claimants very often bear no reasonable relationship to the damages actually proven,” noting that one consumer tried to claim all $20 billion. A payment or offer of payment has been made for 72 percent of BP oil spill fund claims. Some claims have been denied. Others are pending until more documentation is produced. The BP oil claims process has frustrated businesspeople such as fishermen accustomed to operating on an informal cash basis who often seal deals with a handshake instead of a contract. In 574 cases disputed by claimants who believed payment was too low or rejection was unfair, the Coast Guard, charged with arbitrating disputes, hasn’t overturned a single one.

Lawyers attracted by the smell of money

Tens of thousands of Gulf Coast residents — in particular vulnerable populations with language and culture disadvantages such as the region’s large contingent of Vietnamese fishermen — have been misled into signing up with lawyers or have been unaware that claims have been filed in their name. In his statement, Feinberg said the proliferation of fraudulent legal activity was “an obstacle to the efficiency and speed in getting the checks out.” The New York Times reports that several law firms have targeted Vietnamese fishermen to con them onto their client lists. The larger the client list, the larger they payout for the lawyers when BP settles the claim. The New York Times reports of a San Antonio law firm that filed claims for thousands of Vietnamese, all listed as deckhands with identical earnings. The claims were rejected, and many people were surprised to discover their names on the list.